The circular flow model shows the interaction between two groups of economic decision-makers—households and businesses—and two types of economic markets—the market for resources and the market for goods and services.
Money is not considered as a factor of production. Money is medium of exchange and hence it cannot help to increase the productivity of an economy like other factors of production, thus the factors of production are Land, Labour, Capital and Entrepreneurship.
Businesses (firms) in the Resource Market are the consumers of the productive resources (factors of production) in the circular flow model. They purchase the use of land, labor, capital, and entrepreneurship from households in the Resource Market (Factor Market) using the revenue they earned in the product market.
Money is not considered as a factor of production. Money is medium of exchange and hence it cannot help to increase the productivity of an economy like other factors of production, thus the factors of production are Land, Labour, Capital and Entrepreneurship.
In economics, a circular flow model is a diagram that is used to represent the monetary transactions in an economy. There are two flows present within the model including flow of physical things (goods or labor) and flow of money (what pays for physical things).
The four main parts of the circular flow diagram are individuals, firms, market for goods and services, and market for factors of production. These four parts serve as a framework for understanding the continuous flow of money throughout an economy.
The people who do the selling and buying are producers and consumers. Producers create, or produce, goods and provide services, and consumers buy those goods and services with money. Most people are both producers and consumers.
The primary participants in the circular flow of goods and services are businesses and households. Households are made up of individuals who both spend money and are the recipients of money. Businesses do the same—they spend money and also receive money from households.
Economists divide the factors of production into four categories: land, labor, capital, and entrepreneurship.
Factors of ProductionLand as a Factor of Production. Land is a broad term that includes all the natural resources that can be found on land, such as oil, gold, wood, water, and vegetation. ... Labor as a Factor of Production. ... Capital as a Factor of Production. ... Entrepreneurship as a Factor of Production. ... More Resources.
The correct answer is Revenue generated after production.
Answer and Explanation: The correct option is C. 175 shades of Microsoft stock. Stock held in a company is not a factor of production.